Context:

Recently, Finance Minister Nirmala Sitharaman made history by presenting a record seventh budget as Finance Minister (Morarji Desai six times) and unveiled and unveiled a host of significant boosters for sectors such as jobs, agriculture, housing, and rural infrastructure etc.

Key Highlights of the Budget (2024-2025)

Roadmap for the Pursuit of “Vikshit Bharat2047” 

Theme of the Budget 2024

• Employment 
• Skilling 
• MSMEs (Micro small medium enterprises) 
• Middle class 

Priorities for Vikshit Bharat

The Union Budget laid out nine priorities for this year and coming years which include:

• Productivity and Resilience in Agriculture
• Employment and skilling
• Inclusive Human Resource Development and Social Justice
• Manufacturing & Services
• Urban Development
• Energy security
• Infrastructure
• Innovation, R&D
• Next-generation reforms

Govt's expenditure under major heads (2024-2025)

• Defence: 4,54,773 cr
• Rural Development: 2,65,808 cr
• Agriculture and Allied Activities: 1,51,851 cr
• Home Affairs: 1,50,983 cr
• Education: 1,25,638 cr
• IT and Telecom: 1,16,342 cr
• Health: 89,287 cr
• Energy: 68,769 cr
• Social Welfare: 56,501 cr
• Commerce & Industry: 56,501 cr

Productivity and Resilience in Agriculture

Transforming Agriculture Research Comprehensive review of the agriculture research setup to bring focus on raising productivity and developing climate-resilient varieties.

• National Cooperation Policy: Release of new varieties:109 new high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers
• Natural Farming: 1 crore farmers across the country will be initiated into natural farming, supported by certification and branding in the next 2 years.
  10,000 need-based bio-input resource centers to be established.
• Shrimp Production & Export: Financing for Shrimp farming, processing and export will be facilitated through NABARD.
• Digital Public Infrastructure (DPI): DPI for coverage of farmers and their lands in 3 years.
  Digital crop survey in 400 districts.
  Issuance of Jan Samarth-based Kisan Credit Cards

Employment and Skilling

• The Prime Minister's package comprises five major schemes with a budget of Rs. 2 lakh crore, targeting the creation of jobs, skill enhancement, and opportunities for 4.1 crore youth over five years. 
• The Budget announced financial support for loans up to Rs 10 lakh for higher education.
• Additionally, Rs. 1.48 lakh crore has been allocated for education, employment, and skill development this year.

Inclusive Human Resource Development and Social Justice 

• Purvodaya Scheme (Comprehensive support for the Eastern region)
  A comprehensive development plan named Purvodaya will be launched to support the all-round development of the eastern region, covering states like Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh.
• Allocation of more than ₹3 lakh crore for schemes benefitting women and girls.
• Pradhan Mantri Janjatiya Unnat Gram Abhiyan
  Improving the socioeconomic condition of tribal communities covering 63,000 villages benefitting 5 crore tribal people.

Manufacturing and services 

Critical Minerals Mission for domestic production, recycling, and overseas acquisition

• Internship Opportunities: Scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years.
  Allowance of ₹5,000 per month along with a one-time assistance of ₹6,000 through the CSR funds.
• Provision for MSMEs: A new credit guarantee scheme for MSMEs in manufacturing will be introduced to facilitate term loans for purchasing machinery and equipment without requiring collateral or guarantees. This guarantee fund will offer guarantees of up to Rs 100 crore

Urban Development: 

• Street Markets: Envisioning a scheme to develop 100 weekly ‘haats’ or street food hubs in select cities.
• Transit-Oriented Development: Transit-Oriented Development plans for 14 large cities with a population above 30 lakh.
• Water Management: Promote water supply, sewage treatment, and solid waste management projects and services for 100 large cities through bankable projects
• Under PM Awas Yojana Urban 2.0, Rs.10 lakh crore will be invested to address housing needs for 1 crore urban poor and middle-class families.

Energy Security

Initiatives with the private sector in Nuclear Energy

• Setting up Bharat Small Reactors
• R&D of Bharat Small Modular Reactor and newer technologies for nuclear energy

Energy Audit

• For electricity storage and facilitation of smooth integration of the growing share of renewable energy Pumped Storage Policy
• A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant.

PM Surya GharMuft Bijli Yojana

• Financial support for shifting micro and small industries to cleaner energy

Forms of energy

• Facilitate investment-grade energy audit in 60 clusters, next phase expands to 100 clusters.

Infrastructure 

• Provision of ₹ 11,11,111 crore for infrastructure (3.4% of GDP).
• ₹1.5 lakh crore to states as long-term interest-free loans to support resource allocation.
• Phase IV of PMGSY( Pradhan Mantri Gram Sadak Yojana) will be launched to provide all-weather connectivity to 25,000 rural habitations
• Tourism: Development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor modeled on Kashi Vishwanath Temple Corridor.

Innovation, Research & Development

• Operationalization of the Anusandhan National Research for basic research and prototype development. 
• Private sector-driven research and innovation at commercial scale with a financing pool of ₹1 lakh crore 
• Space Economy: A venture capital fund of ₹1,000 crore is to be set up.

Next Generation Reforms

• Digitization of cadastral maps
• Establishment of a land registry
• Unique Land Parcel Identification Number or Bhu-Aadhaar for all lands.
• Taxonomy for climate finance: Enhancing the availability of capital for climate adaptation and mitigation-related investments
• FDI and Overseas Investments: Simplified to facilitate FDIs and promote opportunities for using Indian Rupee as a currency for overseas investments.
• NPS Vatsalya: A plan for contribution by parents and guardians for minors. 
• New Pension Scheme (NPS): A solution that addresses the relevant issues, protects the common citizen, and maintains fiscal prudence will be formed

Section-B: The New Tax-related Proposal 

• In the new tax regime, the tax rate structure will be revised. Below is the new structure:
• The standard deduction is increased to Rs 75,000 from Rs 50,000.
• Monetary limits for filing appeals related to direct taxes, excise, and service tax in the Tax Tribunals, High Courts, and Supreme Court have been increased to Rs 60 lakh, Rs 2 crore, and Rs 5 crore respectively.
• To improve social security benefits, the deduction of expenditure by employers towards NPS is proposed to be increased from 10 to 14% of the employee’s salary.
• The TDS (Tax deduction at source) rate on e-commerce operators is to be reduced from 1 to 0.1 %.  Moreover, credit of TCS (Tax collection at source) is proposed to be given in the TDS to be deducted from the salary.

Rationalization of capital gain

• Short-term gains of financial assets to attract a 20% tax rate
• Long-term gains on all financial and non-financial assets to attract a tax rate of 12.5%
• Increase in limit of exemption of capital gains on financial assets to ₹1.25 lakh per year

Employment and investment 

• Abolish ANGEL tax for all classes of investors.
• Simpler tax regime to operate domestic cruise
• Provide for safe harbor rates for foreign mining companies (Selling raw diamonds)
• Corporate tax rate on foreign companies reduced from 40% to 35%
• The indexation bonus that was offered on property sales was announced to be eliminated in this budget. Many property sellers will consequently be unable to increase their acquisition price and lower their capital gains.

About the Budget

• According to Article 112 of the Indian Constitution, the Union Budget outlines the government's estimated receipts and expenditures. It is also referred to as the Annual Financial Statement of the Government; however, the term "budget" is not explicitly mentioned in the Constitution.

Macro-Economic Highlights

GDP growth rate

• India achieved an impressive 8.2% GDP growth in FY 2023-2024, driven largely by government capital expenditure.
• For the Financial year 2024-25 estimated to be 10.2%.

Inflation 

• India's inflation remains low and stable, progressing towards the 4% target. Core inflation (excluding food and fuel) currently stands at 3.1%.

Govt Receipts

• For the fiscal year 2024-25, total receipts excluding borrowings are projected to be Rs. 32.07 lakh crore. 
• Gross market borrowings through dated securities are anticipated to be Rs. 14.01 lakh crore, while net market borrowings are estimated at Rs. 11.63 lakh crore. Additionally, net tax receipts are expected to amount to Rs. 25.83 lakh crore.
• Due to an increase in tax revenue, the government reduced its projected borrowings for the current fiscal year to 14.01 lakh crore. 
• To achieve its desired budget deficit, the government must issue dated securities to borrow money.
• Govt Expenditure Total Expenditure for FY 2024-25- The total expenditure is estimated at Rs. 48.21 lakh crore.
  Interest payments estimated at Rs. 11 lakh crore.

Fiscal deficit

• The fiscal deficit is estimated at 4.9% in 2024 and 4.5% in 2025 of GDP. The primary deficit is 1.4%.

Govt receipt 

Govt Expenditure